Bitcoin’s Volatility Reaches 12-Year Low

The 12-month volatility of the leading cryptocurrency has reached its lowest level in 12 years, noted Charlie Bilello, senior market strategist at Creative Planning.

Bitcoin’s 12-month annualized volatility…
Jan 2012: 179%
Jan 2013: 68%
Jan 2014: 140%
Jan 2015: 81%
Jan 2016: 61%
Jan 2017: 49%
Jan 2018: 102%
Jan 2019: 85%
Jan 2020: 65%
Jan 2021: 85%
Jan 2022: 73%
Jan 2023: 63%
Jan 2024: 45%$BTC pic.twitter.com/Z2ZEeew1Yx

— Charlie Bilello (@charliebilello) January 27, 2024

The metric has fluctuated significantly over the years but has shown a clear downward trend during this period. From 179% in January 2012, it has decreased to 45% at the beginning of the current year.

A higher figure indicates significant price volatility and signals greater market unpredictability. Low values of the metric suggest much more stable trading conditions.

“Lower volatility may indicate a greater number of long-term holders,” commented CryptoQuant analyst Bradley Park to DL News.

In mid-January, during a podcast by Peter McCormack, What Bitcoin Did, Galaxy Digital’s head of research Alex Thorn and Bloomberg exchange analyst James Seyffart suggested that the launch of spot Bitcoin ETFs in the US will further smooth out price fluctuations.

“A huge amount of BTC will be in the accounts of [investment] advisors. They are not interested in intraday trading,” stated Thorn.

Seyffart agreed and explained how portfolio managers will reduce volatility while maintaining returns.

Price changes in assets will necessitate rebalancing investments to keep the target share unchanged, the expert noted. For example, if Bitcoin rises by 80% and the portfolio’s set percentage is 5% of the total volume, the advisor will likely sell the cryptocurrency to maintain the ratio. 

Conversely, in the event of a significant drop, the asset will be bought to maintain the target value, Seyffart said.

Some industry experts have highlighted certain risks that exchange-traded products based on digital gold pose.

The potential for institutions to apply various strategies at the intersection of the cryptocurrency market and TradFi regarding Bitcoin ETFs was pointed out by former BitMEX CEO Arthur Hayes.